How Is Perpetual Steering Growth Amid Strategic Shifts and Regulatory Challenges?

Steady Financial Performance Amid Strategic Refresh

Perpetual Limited closed FY25 with an underlying profit after tax (UPAT) of $204.1 million, marking a slight 1% decline compared to the previous year. Despite this modest dip, the company demonstrated resilience with a 3% increase in total operating revenue to $1.373 billion, supported by growth across its core segments – Asset Management, Wealth Management, and Corporate Trust.

The net loss after tax narrowed significantly to $58.2 million, a marked improvement from FY24, primarily due to lower significant items such as impairment charges and accrued incentive compensation liabilities. This reflects Perpetual’s ongoing efforts to streamline operations and manage costs effectively during a period of strategic transformation.

Asset Management – Growth Despite Outflows

Asset Management remains the largest contributor to Perpetual’s revenue, generating $903.9 million in FY25, a 2% increase from FY24. The segment’s assets under management (AUM) grew to $226.8 billion, buoyed by favourable equity markets and investment performance, despite experiencing net outflows of $16.2 billion. Performance fees surged by 117% to $34.3 million, driven by strong results from key funds including J O Hambro UK Equities and Pendal Microcap Opportunities.

However, the segment faced challenges with net outflows concentrated in Global, International, and US equity strategies, particularly within J O Hambro and Barrow Hanley boutiques. The cost-to-income ratio edged slightly higher to 78%, reflecting investments in technology, cyber security, and foreign currency impacts.

Wealth Management – Navigating Uncertainty with Client Growth

Wealth Management reported a 4% revenue increase to $235.6 million, driven by strong equity markets and new institutional client wins. Funds under advice (FUA) rose 9% to $21.5 billion, reflecting net inflows and market appreciation. Despite these positives, underlying profit before tax declined 5% to $51.5 million, impacted by uncertainty surrounding the potential sale of the business and increased operating expenses, including legal and retention costs.

The segment continues to focus on serving high-net-worth clients, medical professionals, and philanthropic organizations, with growth in Jacaranda Financial Planning and priority life insurance segments providing some offset to broader pressures.

Corporate Trust – Strong Momentum and Digital Innovation

Corporate Trust delivered a robust 9% revenue increase to $204.2 million, with funds under administration (FUA) rising 5% to $1.273 trillion. Growth was driven by expansion in Debt Market Services, Managed Funds Services, and Digital and Markets offerings. The segment’s underlying profit before tax increased 7% to $90.9 million, maintaining a stable cost-to-income ratio of 55%.

Notably, Digital and Markets revenue grew 18%, reflecting accelerated adoption of cloud-based SaaS platforms and new client onboarding. Investments in technology and cyber security underpin the segment’s strategy to modernize legacy systems and enhance client service capabilities.

Balance Sheet Strength and Capital Management

Perpetual strengthened its balance sheet during FY25, with cash and cash equivalents rising by $121.9 million to $343.2 million. Corporate debt increased modestly to $738.5 million, primarily to fund separation costs and foreign exchange impacts. The company maintained compliance with all debt covenants, with a gearing ratio of 31.0%.

The Board declared a final unfranked dividend of 54 cents per share, aligning with the company’s dividend policy targeting a payout ratio between 60% and 90% of UPAT. The Dividend Reinvestment Plan will be available without discount, supporting shareholder returns amid ongoing strategic initiatives.

Regulatory Landscape and Risk Management

Perpetual is actively navigating a complex regulatory environment, including new climate-related financial disclosure requirements under Australian Sustainability Reporting Standards, AML/CTF reforms, and evolving European and UK sustainability disclosure regimes. The company has established dedicated working groups and engaged external expertise to ensure compliance and readiness.

Risk management remains a core focus, with comprehensive frameworks addressing strategy execution, people retention, compliance, cyber security, and sustainability governance. The Board’s Audit, Risk and Compliance Committee oversees these efforts, supported by a robust three lines of accountability model.

Looking Ahead

Perpetual’s refreshed strategy emphasizes simplification, operational excellence, and measured investments for growth over the next three years. The company plans to continue reducing complexity, strengthening its balance sheet, and investing in digital capabilities, particularly within Corporate Trust. The potential sale of the Wealth Management business remains a key focus area, with market participants watching closely for developments.

Quarterly updates will provide further insights into the execution of this strategy and the impact of market and regulatory conditions on Perpetual’s performance.